Indemnity Insurance of Deed of Postponement Bank conveyancing obligations
HSBC and Leeds Building Society, as with most lenders, set their own requirements when it comes to deed of postponement indemnity insurance. The content herein aims to help property law practitioners on the different bank conveyancing panel where the title for the the property to be mortgaged incorporates deed of postponement. Solicitors should still check the Council of Mortgage Lenders’ handbook requirements for each mortgage company, be it RBS, Skipton or Barnsley BS. The information on this page is not focused on deed of postponement indemnity insurance requirements.
Need help with deed of postponement indemnity insurance from your lender?
Lloyds TSB and Barclays in common with many banks, instructions are such that where deed of postponement indemnity insurance is effected:
- you is obliged to disclose to the insurer all relevant information which you have obtained
- the deed of postponement indemnity insurance policy should always be in favor of the lender and, wherever possible, in favour of the borrower and any next owner or mortgage company. Where the borrower will not be covered by the deed of postponement indemnity insurance policy, you must advise the borrower of this fact.
- your practice are responsible for approving the terms of the deed of postponement policy on behalf of the bank
- the deed of postponement indemnity insurance policy should be placed on risk without cost to the lender
- your practice must explain to the borrower that the borrower must comply with any conditions of the deed of postponement indemnity insurance policy and that the borrower should notify the mortgage company of any notice or potential claim in relation to the policy
- your practice must provide a duplicate of the deed of postponement indemnity insurance to the mortgagor and explain to the mortgagor why the deed of postponement indemnity insurance policy was effected and that a further policy might be necessary if there is further lending against the mortgaged property
- the limit of indemnity must satisfy the requirements for the bank (see UK Finance Lenders’ Handbook Part 2 )
- the deed of postponement indemnity insurance policy must not incorporate conditions that you recognise would void or compromise the interests of the mortgage company
| Lender | Requirement |
|---|---|
| Adam & Company | The open market value of the property according to the valuation report. |
| Adam & Company International | The open market value of the property according to the valuation report. |
| April Mortgages | An amount at least equal to the mortgage advance. |
| Aviva Equity Release | Full value of the property. |
| Clydesdale Bank | Open market value of property. |
| First Direct | The value of the insurance must be for at least the full value of the property |
| Foundation Home loans | An amount equal to 110% of the valuation or purchase price - whichever is the greater. |
| Halifax | An amount at least equal to the mortgage advance. |
| Landbay Partners | An amount equal to 100% of the property valuation or purchase price (whichever is greater) plus 10%. |
| Lloyds Bank Private Banking | Not less than the Facility plus 10%. |
| MPowered Mortgages | Either the minimum reinstatement value or where there is no valuation the market value/purchase price figure (whichever is higher). |
| Manchester Building Society | Purchases- higher of the Purchase price & valuation Re-mortgages- Loan x 115%. |
| Molo Finance Buy to Let | An amount at least equal to the amount of the mortgage advance. Any indemnity insurance policy must protect the borrowers, any successors in title and any mortgages. |
| Monmouthshire Building Society | The higher of the purchase price or valuation. For remortgages, the value of the advance. |
| Mortgage Agency Services | 110% of the purchase price or valuation, whichever is greater |
| Mortgage Express | Amount of loan + 15% |
| NRAM Ltd | Preference for full market value of the property, but if this level of cover is not available, will accept a minimum of the actual loan amount. You must approve the policy on our behalf. |
| Precise Mortgages | An amount at least equal to 110% of the mortgage valuation. |
| TSB | The value of the property |
| The Mortgage Lender | An amount at least equal to the mortgage advance. |
Non lender-specific considerations
The extent of the terms for deed of postponement indemnity insurance are set out in the policy document. Conveyancing solicitors are obliged to direct your non-lender client to the deed of postponement indemnity insurance policy itself. The intention of deed of postponement indemnity insurance is to provide indemnity in respect of the risks set out in the policy schedule - so it is essential check the schedule to determine that it is correct. The lifetime of this non-investment insurance agreement is in perpetuity unless the policy says something to the contrary. Again, please check that this is as you expected.Significant features and benefits of deed of postponement indemnity insurance :
This policy would usually provide protection from financial loss that might arise in the event of a third party making a cliam in respect of the risks identified in the policy document. Deed of Postponement indemnity insurance Cover normally includes- Expenses for works (including architects’ and surveyors’ fees) for the purpose of the development begun, or contracted for, prior to proceedings for the enforcement of the risks specified in the deed of postponement policy, to the extent that such costs are rendered abortive by court decision.
- Loss in market value due to the successful enforcement of the risks specified in the deed of postponement insurance.
- The out of pocket expenses of altering or demolishing all, or part of the development and the reinstatement of the land, insofar as such alteration, demolition or re-instatement is made necessary by court order.
- Reimbursement for compensation incurred in any proceedings concerning the risks specified in the deed of postponement insurance, as well as fees of a legal nature.
- All sums paid with the written consent of the insurance company to liberate the property from the risks specified in the deed of postponement insurance.
- All other costs and expenses incurred by the Insured with consent in writing from the relevant insurer
Always consider what is not included in the deed of postponement policy e.g. does the policy cover any property that has been altered within the year prior to the policy being put on risk? Does it cover legal costs?
Further considerations for deed of postponement indemnity insurance
Bear in mind, that if a covenant is breached and changes have to be made, simply getting monetary compensation from deed of postponement insurance may be adequate for your client. Content on this webpage is for general information for conveyancers and solicitors in England and Wales on the the bank solicitor panel, it does not constitute advice for members of the public who should contact their lawyer for advice relating to the bank indemnity insurance. Whilst we endeavour to keep the information up to date and correct we do not make any representation or warranties of any kind about its completeness, accuracy, reliability or suitability. Any reliance you place on the information is strictly at your own risk. Lexsure will not be liable for any direct or indirect loss or damage arising out of or in connection with the use of this information.
An important exclusion applying to most deed of postponement Policies is if you make any contact with any party who might cause a claim under the Policy, it can invalidate the cover.
The above information covers to properties in England and Wales.